6 IntroductionImplementing XBRL for a cross-border banking group in EuropeOur EnvironmentBELUFRSAPHoldingDBBDCLDBLSTATUTORYMAGNITUDECOMMON PARAMSPEC. LOCAL PARAMCONSOLIDATEDCONSODHLDDBBDCLDBLINTERNALREPORTINGEXTERNALVISUALSCOPEMIS CONSOESSBASECHECK

8 IntroductionImplementing XBRL for a cross-border banking group in EuropeComplexity? (Example)Maximum Credit Risk Exposure is referred to in Solvency II, Basel II and IFRS regulations.Of course, as the regulations are different, a slight shift in the definition is present and leads to distortions of the presentation of the same concept in the different reports.As highlighted on the next slide, the same information is requested in three different reporting. A complete reporting under XBRL could help providing an harmonized concept and avoid double or even triple entries for one information.Furthermore, no precise and harmonized definition does exist, some reporting companies are considering full exposure, other “non-depreciated” exposure etc..Above the problem of definition, another challenge is to comply with all the different interpretations for each country. Cross-border reporting turns out to be a real nightmare. Find a definition internally that may fit all regulations.

9 What does XBRL mean for Dexia?AgendaImplementing XBRL for a cross-border banking group in EuropeWhat does XBRL mean for Dexia?IntroductionWhat does XBRL mean for Dexia?ExperiencesCOmon REPortingFINancial REPortingIFRS TaxonomyConclusion

10 Therefore : benchmarking !What does XBRL mean for Dexia ?Implementing XBRL for a cross-border banking group in EuropeWhy is XBRL interesting for a preparer?Organizing the presentation of financial statementsTrue and fair view (Framework §46)Respect of accounting standards use for preparation…and neutrality (Framework §36)A good preparer must therefore compare regularly its financial statements with the ones of its peers (information to be obtained from Financial Communication department or analysts surveys), to be sure that its options are in line with the othersTherefore : benchmarking !

11 Therefore : benchmarking !What does XBRL mean for Dexia ?Implementing XBRL for a cross-border banking group in EuropeWhy is XBRL interesting for an analyst?Reviewing the financial statementsBase of presentationOptions selected in accounting standardsValuation principlesCompare them with peers (Framework § 39)Etc…A good analyst must therefore compare regularly the Financial Statements, mainly the disclosures, presentation and valuation policies, to be sure that the financial statements are comparableTherefore : benchmarking !

12 What does XBRL mean for Dexia ?Implementing XBRL for a cross-border banking group in EuropeThe PastDexia is active in XBRL sinceWHY?We saw the regulators’ attraction to XBRL because it was the right IT language to fit their needs in IFRS and Basel II reportingXBRL was seen as a powerful tool for reducing administrative burden internally (Use XBRL as a tool for more harmonization, flexibility and gain of time both vertically and horizontally)Importance of exchange of data in a cross border banking group (Internally and externally)Importance of having one language with all regulators

13 What does XBRL mean for Dexia ?Implementing XBRL for a cross-border banking group in EuropeThe PresentDexia is still active in XBRL:Participation (as much as possible) in regulators’ discussions on XBRLParticipation in XBRL International conferencesThierry Nederlandt, Head of Accounting and Consolidation (Dexia Group), member of the XBRL Advisory Council (XAC) of the IASC FoundationUse of XBRL in various regulatory reporting in European countries:COREPFINREPMIFIDPillar IIChosen for a flexible XBRL approach/tool (instead of a regulatory approach/tool) allowing easy internal and external developing capabilities

14 What does XBRL mean for Dexia ?Implementing XBRL for a cross-border banking group in EuropeThe PresentStaying up to date on the current evolutions permits the group to stay aware of the future requirements that will be applicable in the next steps of implementation of XBRL and to already prepare the staff and the processes in order to enter easily in action for each update;Dexia also answers to draft papers and taxonomies from IASCF and other regulators to support the financial industry’s specificities and our vision.Dexia is already adapting it’s IT infrastructure in order to benefit, internally, from the advantages of an harmonized system.Fast closeComparability (Internal & External)Mutualization of knowledgeInternal managerial informationetc…

15 Banks to create their own extensions or their own taxonomies?What does XBRL mean for Dexia ?Implementing XBRL for a cross-border banking group in EuropeThe FutureXBRL to be used by more and more financial reporting stakeholders:Stock exchangesRating agenciesOther…XBRL to become not only an external language of communication but also internalBanks to create their own extensions or their own taxonomies?Referring to the US where 12 different taxonomies are already in use; considering the specificities of the industry.Or having particular extensions and dimensions to keep one single reporting line but also respecting industries specificities

16 AgendaImplementing XBRL for a cross-border banking group in EuropeExperiencesIntroductionWhat does XBRL mean for Dexia?ExperiencesCOmon REPortingFINancial REPortingIFRS TaxonomyConclusion

18 Experiences : COREPImplementing XBRL for a cross-border banking group in Europe“Pure Regulatory” ReportingCOREP (COmmon REPorting – Pillar I reporting under Basel II framework), could become a real nightmare…Starting from a single and unique European data model, regulators modified it to fit their own local needsSome banks (locally active mostly) were also arguing for modifying the European modelRegulators also changed the definitions of conceptsResulting for crossborder banks in a nightmare, where the same reporting element may be computed and reported in many different ways (12 COREP for Dexia)But will be adjusted to a REAL COmon REPorting in 2012 (?)But CEBS has now committed“to deliver EU-wide reportingformats in 2012 for all creditinstitutions and investment firmslocated in the European Union”Each regulator has changed the EU base taxonomy (red box)to fit with its needs, leading to several taxonomies andhuge costs for EU global banksMIFID and Pillar IIReported in XBRL only in BelgiumTo be adopted by other EU countries ?

19 Experiences : COREPImplementing XBRL for a cross-border banking group in EuropeRegulatory failure: risk with future evolutionWe need to be careful any proposed regulatory intervention itself does not lead to further regulatory failure. Two potential avenues for such regulatory failure are described below:If the proposal sets harmonised requirements for information that is so high that compliance costs for firms are greater than benefits for the market as a whole; orIf the proposal requires a too low ceiling (key data are not collected, leading to net costs) regulators will be no longer able to identify some risks effectively, leading to an ineffective supervisory framework and, as a potential consequence, to a higher risk of financial instability.Source: CEBS: Expert Group on financial Information, IA COREP May 5th, 2009

23 Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeFINancial REPortingFINREP (FINancial REPorting) regulatory reporting based on IFRS and having its own taxonomySame issue for FINREP than for COREP (but limited to specific parts)FINREP taxonomy is based on the IASCF taxonomyThe link between both taxonomies to be stronger and strongerLink between the FINREP and our Financial StatementsAs per the examples that will follow, a large part of the required information is, if not similar, very close.

24 “ The same information should be inserted only once “Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeFINREP: Basic principle“ The same information should be inserted only once “As such, we build up a comprehensive file with all the information required by all the regulatorsNo more need to input twice the same informationThe information is always available for every reporting entityThese principles should be applied at all levels of consolidation

25 Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeFINREP: Basic principleCounterpartiesMapping of the reportings and related ECB comments

26 Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeFINREP: Basic principleCommon definitionse.g. “public sector”"Non-commercial administrative bodies responsible to central governments, regional governments or local authorities, or authorities that in the view of the competent authorities exercise the same responsibilities as regional and local authorities, or non-commercial undertakings owned by central governments that have explicit guarantee arrangements, and may include self administered bodies governed by law that are under public supervision". Art 4 (18) of the CRD.Used for different reporting in different states like COREP and FINREP in Luxembourg and BelgiumLike the Equity instruments Including statistical impairment in FINREP but not in COREP, currently too much discrepancies and different definitions. Need for harmonization.

27 Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeExampleLinks with FINREP (and F/S)

28 Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeExample Links with F/S (and FINREP), partly provided by RMG

35 Benchmarking ! Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeComments on the discussion paperDiscussion paper “Financial Statements Presentation”Not very suitable for the banking industry, like most of the IFRS, very oriented towards industrial companies.Should be more oriented towards a multi-tier service instead of only investor oriented.Benchmarking !Very positive to impose a rigid classification as it improves comparability but this classification should reflect the realities of the different industries.We do not support presenting cash flows for the banking industry as it won’t add any value.We do believe that the use of a global standard like XBRL could reflect the specificities of our industry and furthermore increase comparability between and inside the different industries.We believe that the use of extensions and dimensions in XBRL will provide both the structure and the flexibility asked by the stakeholders.

36 Experiences: FINREPImplementing XBRL for a cross-border banking group in EuropeFINREP ChallengesLink with IFRS and banks’ financial statementsNational discretions:CEBS guidelines not always clearCEBS guidelines not always respected by member statesChanges in the “business format” may have insidious impact on the taxonomy (deleting a line changes the definition of the total – unless “among which”)Additional information inconsistent with the CEBS formatSometimes, regulators may give interpretations to IFRS rulesDimensions:Preferred instead of tuples (link with IASCF?)More standardization may be a benefit (exhaustive list of flows used throughout FINREP)Definitions of some dimensions (counterparties => links with COREP, ECB, etc.)

37 As per our chart of accounts, clearly relatedExperiences: FINREPImplementing XBRL for a cross-border banking group in EuropeThe Future: Using Dimensions ?As per our chart of accounts, clearly related

38 AgendaImplementing XBRL for a cross-border banking group in EuropeIFRS TaxonomyIntroductionWhat does XBRL mean for Dexia?ExperiencesCOmon REPortingFINancial REPortingIFRS TaxonomyConclusion

39 IFRS TaxonomyImplementing XBRL for a cross-border banking group in EuropeMain Structure of the IFRS taxonomyThe Taxonomy is following rule by rule the IFRS requirementsEase to find an item and the related disclosuresNo problem to find out relative examples or description rulesClear follow up of the updates of the regulation. No difficulties to highlights impacts of IFRS changes

40 IFRS TaxonomyImplementing XBRL for a cross-border banking group in EuropeIT viewpoint of the XBRL taxonomy

41 IFRS TaxonomyImplementing XBRL for a cross-border banking group in EuropeTable Presentation of the taxonomy

42 IFRS taxonomyImplementing XBRL for a cross-border banking group in EuropeSummary of the main comments relating to IFRS taxonomyThe issue of versioning has been raised by number of respondentsProposition to add formal descriptions of the concepts in order to avoid misunderstandings or divergent interpretations.Propositions to add extensions relating only to some industries or to propose different taxonomies for the different industries.Proposition to extend examples to all the possible situations, could be through dimensions, to allow other examples than the ones proposed by the IFRS wording. (Not all the reporting companies have biological assets…)Need to follow more the detail level required by the standards and the common practice.Need to translate the choices left to the reporting entities in the taxonomy (example: either in the notes or in the PFS)The use of the concept of “dimension” could help structure the information provided facilitating even more the understanding and the use of the provided information.

43 AgendaImplementing XBRL for a cross-border banking group in EuropeConclusionIntroductionWhat does XBRL mean for Dexia?ExperiencesCOmon REPortingFINancial REPortingIFRS TaxonomyConclusion

44 IFRS TaxonomyImplementing XBRL for a cross-border banking group in EuropeHow does it work ?Data sourcesXBRL toolAccountingMAPPINGRiskxls VALIDATIONTaxXBRL conversionOthers

45 Experiences : COREPImplementing XBRL for a cross-border banking group in EuropeFeedbackOn the softwares (XBRL focused) :Flexible enough to be adapted to all taxonomiesTo be adapted on a international banking IT structureMapping is still the keyAdditional taxonomies can be quickly addedOn the taxonomies :Advantages of XBRL aren’t usedBasis taxonomies are modified by local regulatorsA unique EU taxonomy is necessaryXBRL is not mature enough to be internally used

46 ConclusionImplementing XBRL for a cross-border banking group in EuropeLaunch of the XBRL reportingDetail of problems faced by a transnational bank implementing XBRLDifferent systemsPeople are reluctant to changeInformation retention instead of global info sharing (protectionism attitude due, partly, to the crisis)Risk of national protectionism from the different branchesRisk of additional national requirements => no additional requirements should be accepted, the member states should be ready to accept “as is” taxonomy as it is perfectly in line with IFRS requirements (and those should be accepted anywhere)

47 Experiences: FINREPImplementing XBRL for a cross-border banking group in Europe

48 ConclusionImplementing XBRL for a cross-border banking group in EuropeIt’s just started but already running…Taxonomies need to be managed in an harmonized way i.e.Development of extensions has to be consistent with the “parent taxonomy”Need for Best PracticesButXBRL standards are now strong enough to be industrializedMore and more authorities are adopting XBRL, it is becoming the standardXBRL offers a great opportunity to complete the work done by the IASB and the IFRIC on IFRS principles, as now XBRL may help to better compare information coming from different companiesFurthermore, the use of XBRL does not require huge investments as most of the software are open-source

49 THANKS FOR YOUR ATTENTIONImplementing XBRL for a cross-border banking group in EuropeQuestions ?THANKS FOR YOUR ATTENTIONContactsGiancarlo PellizzariHead of Prudential Policy

50 Implementing XBRL for a cross-border banking group in EuropeGiancarlo PellizzariHead of Prudential PolicyDexia GroupParis, June 22nd to 25th, 2009